After the collapse of the FTX, Binance, Crypto.com and other major crypto firms pledged to publicly share proof of reserves, showing that they wanted to grow consumer trust in their platform by revealing a full audit of their coins.
Learn how smart money is playing the game of criptocurrency.
On November 25th, the world's largest criptocurrency exchange unveiled proof of its reserves and said an audit of other coins would be pending in the next few weeks.
The company said that it holds 582,485Bitcoin in reserves and users' net balance is 575,742Bitcoin and that Binance has funds that cover all of our users' assets 1: 1, as well as some reserves, showing a reserve ratio of 101%.
The company plans to bring aboard third-party auditors to review their proof-of- reserves, who will provide details on the net balance, equity and debt of each criptocurrency user.
Binance will eventually implement ZK-SNARKs, or zero-knowledge non-interactive argument of knowledge proofs, to demonstrate that customers have enough additional assets to provide collateral for funds, indicating that the total net balance of each user was not negative.
For now, users can check the accuracy of the figures using an independent method: For those who want to go a step further and independently verify their funds, they can copy the source code into a Python application and cross reference it themselves. However, despite the disclosures, Kraken CEO Jesse Powell said that Binance has not yet offered a comprehensive proof-of- reserve audit, which would allow customers to check that each account is part of that total, and provide signatures showing that Binance maintains control over the specific wallets cited in the total. Without disclosure of liabilities, Powell said that a statement of assets is pointless. FTX imbroglio has led many crypto firms to champion proof of reserves as a marketing ploy. In a conference in Indonesia earlier this month, Binance's CEO Changpeng CZ Zhao said that the industry needed to protect investor funds and boost investor confidence by disclosing proof of reserves. That is absolutely going to be where the focus is for the next few months, which is right, he said. We have learned from our mistakes. This is a critical moment for the entire industry, according to Kris Marszalek, CEO ofCrypto.com, who said there are still trustworthy platforms in the aftermath of the FTX debacle. Safety and security of users and funds is a priority, and transparency is more important than ever. It requires full and collective commitment. After FTX fell from grace, CEOs like Marszalek hope to signal that some crypto firms are worth believing in: It is incumbent on us to send a strong message to the world that there are trustworthy platforms for cryptocurrencies, he said.
William Quigley, co-founder of Tether, told TheStreetCryptocurrency, that investors will be asking more questions about their debt, internal risk management controls, and their use of collateral pledged against loans.
Tether released its quarterly attestations earlier this month. The company said it was unrelated to the FTX collapse.